As the Common Framework process drags on for a number of countries and the international community looks to expand its scope, here are a number of questions that G20 and International Financial Institutions need to address:
- If private creditors are “major players in many debt restructurings”, as World Bank President David Malpass puts it, why are they not included in Common Framework talks from the very beginning, rather than being presented with a fait-accompli after G20 bilateral lenders have agreed with debtors?
- Indeed, why would official creditors not want to tap the experience of private sector creditors who have been exposed to so many of the debtor countries for years?
- Why is the international community still questioning the issue of burden-sharing by private creditors? Past restructurings have always seen private creditors fully taking part in restructurings, whether in Ecuador, Argentina, Ukraine or Zambia, to name a few
- Why is the Common Framework process even necessary if countries like Ecuadorwere able to agree with the likes of the IMF, private creditors and China on an individual basis and much faster?
- Why is it taking so long to push ahead with the CF in the case of Zambia, for example, and what similarities are there to non-CF processes such as the lengthy one we are seeing in the case of Sri Lanka?
- Is it ok that institutions like the World Bank are trying to convince countries to go down the Common Framework route, meaning certain downgrades, while the WB itself is not prepared to participate in restructurings because its own ratings could suffer?
- Why has the Common Framework been imposed on sub-Saharan African countries but not Latam countries? All the more so as Argentina, for example, enjoys way more access to IMF funding than the whole of sub-Saharan Africa.
- Why does the IMF impose zero or close to zero non-concessional borrowing limits on SSA countries but not on Latam countries? Yes, one understands the macro-prudential risks but surely there is a case for promoting private+public lending programs. Otherwise sub-Saharan African countries and others like Sri Lanka risk facing yet another lost decade…